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8-16 18zm43-19h9c5 0 9 2. 8 9 8 0 6-4. On March 16th, the Cypriot President Nicos Anastasiades, who’d been in office for about a month, announced a strategy to solve the country’s banking crisis. This plan, which would be funded in part by confiscating money directly from every single bank account in Cyprus—even the very smallest—met with instantaneous and violent opposition from the country’s citizens. Offstage, the European Union, led by a group of adamant Germans, Finns, and Danes, as well as the I. European Central Bank, pointed a cannon at Anastasiades’s head: if he didn’t move forward with this plan, the Cyprus banks would go bust and their hapless customers would lose pretty much all their money, instead of a measly 6. However, under great pressure from their constituents, Cypriot M.
Anastasiades back to the drawing board. The following Monday, the price of the decentralized electronic currency bitcoin rose from forty-five to fifty-five dollars on the major exchanges, and by Wednesday it had nipped up to sixty-five dollars. The financial media generally agreed that the two dramas are related. Cyprus as the likely sign of a forthcoming governmental plunder of their own savings.
Bitcoin-related software were widely reported—but the pieces appear to fit. That a number of panicked Europeans appear to have reckoned the wildly volatile, vulnerable, and tiny bitcoin market a preferable alternative to their own banking system, even temporarily, signals a serious widening of the cracks between the northern and southern E. It also illustrates the broader collapse of trust that is threatening the world of global banking and fiat money. The weakness in existing currencies stems from lack of faith in institutions—particularly central banks, which are often in league with commercial and investment banks. When a government bails out a failed bank or insurance company—in essence, by printing money—the net effect is that the currency as a whole is debased, in favor of a few and at the literal expense of everyone else, which amounts to a fair description of today’s global financial system. Hence the sudden appeal of bitcoins, which appear, for the moment, at least, to be immune to the machinations of inept or crooked bankers and politicians.
In many ways, bitcoins function essentially like any other currency, and are accepted as payment by a growing number of merchants, both online and in the real world. But they are generated at a predetermined rate by an open-source computer program, which was set in motion in January of 2009. Standards vary, but there seems to be a consensus forming around Bitcoin, capitalized, for the system, the software, and the network it runs on, and bitcoin, lowercase, for the currency itself. The solution is then broadcast throughout the network, and competition for a new block and its twenty-five-coin reward begins. The more computing power you can dedicate to Bitcoin calculations, though, the better your chances of arriving first at each solution.